Singapore Airlines and Tata Sons have agreed to merge Air India and Vistara, to create India’s only airline group operating both full-service and low-cost passenger services.
The merger will see Vistara, a joint venture between Tata Sons and Singapore Airlines (SIA), become part of Air India, bringing the airline (including Air India Express and AirAsia India) to a total of 218 widebody and narrowbody aircraft, serving 38 international and 52 domestic destinations.
The agreement reinforces Air India’s position as India’s largest international and second-largest domestic carrier, allowing it to offer more options and connectivity and enabling it to compete as a leading global airline.
As part of the transaction, SIA has agreed to invest US$250 million ($373,739,500) in Air India, giving it a 25.1 per cent stake in the group.
SIA has also agreed to provide up to US$615 million ($919,191,300), if required, to fund the growth and operations of Air India in FY2022/23 and FY2023/24.
Tata Sons is one of the most established and respected names in India, according to Goh Choon Phong, CEO of Singapore Airlines.
“Our collaboration to set up Vistara in 2013 resulted in a market-leading full-service carrier, which has won many global accolades in a short time,” he continued.
“With this merger, we have an opportunity to deepen our relationship with Tata and participate directly in an exciting new growth phase in India’s aviation market.”
Tata Sons chairman Natarajan Chandrasekaran, said the merger is an important milestone in a journey to make Air India a truly world-class airline.
“We are transforming Air India, with the aim of providing great customer experience, every time, for every customer,” Chandrasekaran said.
“As part of the transformation, Air India is focusing on growing both its network and fleet, revamping its customer proposition, enhancing safety, reliability, and on-time performance.”
The merger is expected to be complete by March 2024, subject to regulatory approvals.
Tata acquired Air India in January 2022, and has since kicked off a wide-ranging transformation programme to strengthen its foundations and revamp its operations.
India has the world’s third-largest aviation market and is considered the fastest-growing global economy, projected to become the third-largest in the world by 2027.
Demand for air travel is surging with passenger traffic expected to more than double over the next 10 years.
Air India Boeing 787-8 Dreamliner (iStock/Ryan Fletcher)
